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Package limitation for containerised cargoes: The Maersk Tangier

The Maersk Tangier is the first English case to consider package limitation for containerised cargoes under the Hague-Visby Rules. Robert Thomas QC and Benjamin Coffer appeared for the successful claimants. The judgment of Andrew Baker J, handed down today, is significant in a number of respects:

The Court held that the Hague-Visby Rules were compulsorily applicable, notwithstanding that the carrier had issued waybills rather than bills of lading.

The Judge declined to follow El Greco v. Mediterranean Shipping [2004] 2 Lloyd’s Rep 537, in which the Federal Court of Australia held that Article IV Rule 5(c) of the Hague-Visby Rules requires cargo to be enumerated in the bill of lading “as packed”.

The Court gave further guidance on what constitutes a “unit” in the Hague and Hague-Visby Rules, following the decision of Sir Jeremy Cooke in The Aqasia [2016] 2 Lloyd’s Rep 510.

The judgment also contains useful guidance on how the package limits in both sets of Rules are to be calculated in practice.

The facts

The claim arose out of damage to a cargo of large unpackaged pieces of tuna stuffed in three refrigerated containers, during carriage by the Defendant container line. The Judge was asked to determine a number of preliminary issues relating to package limitation.

Were the Hague-Visby Rules compulsorily applicable?

It was common ground that the contracts of carriage initially contemplated the issue of bills of lading, but that after delays during carriage the parties agreed that waybills would be issued instead, to prevent further delays at the discharge port.

The Hague-Visby Rules only apply to contracts of carriage which are ‘covered by a bill of lading’ (Article I(b)). A waybill is not a bill of lading for the purposes of the Hague-Visby Rules: The Rafaela S [2005] 2 AC 423. The carrier therefore argued that because waybills had been issued, the Hague-Visby Rules did not apply.

The Claimant successfully argued that the Hague-Visby Rules nevertheless had the force of law in relation to the contracts of carriage, pursuant to the Carriage of Goods by Sea Act 1971. The relevant question is not whether a bill of lading is actually issued, but whether the issue of a bill is contemplated under the terms of the contract: this is established by a series of English and Commonwealth cases in which bills of lading were contemplated but never issued, usually where the cargo was damaged during loading and was therefore never actually shipped (e.g. Pyrene v Scindia [1954] 2 QB 402).

The Judge therefore accepted the Claimant’s argument that the Hague-Visby Rules could apply not only where no bill of lading or other carriage document was issued, but also where a waybill was issued in place of a bill of lading. In such a case, the contract was ‘covered by a bill of lading’ for the purposes of Article I(b).

What is a ‘unit’ for the purposes of the Hague Rules and the Hague-Visby Rules?

The carrier argued that the individual tuna pieces could not be said to constitute ‘units’, because they could not have been shipped breakbulk (e.g. in a reefer vessel) without further packaging. Each piece was approximately 20 to 70 kg, and unpackaged. In The Aqasia [2016] 2 Lloyd’s Rep 510, Sir Jeremy Cooke recently held that ‘unit’ meant ‘a physical unit for shipment’ such that there were no ‘units’ in a bulk cargo. But that did not address what was required for a physical item to constitute ‘a physical unit for shipment’.

It was already clear that not all physical items will constitute ‘units’: in Bekol B.V. v. Terracina Shipping Corporation (‘The Jamie’) (unreported, 13 July 1988), Leggatt J had held that individual pieces of timber would have constituted ‘units’ had they not been bundled up together for shipment. The bundling up of the pieces had the effect of constituting the bundles as ‘packages’, and preventing each piece constituting a unit. Some consideration of the actual packaging of the cargo is therefore necessary to establish whether a particular item of cargo is a ‘unit’.

The Judge rejected the carrier’s argument that the relevant test should be whether the physical items could have been shipped breakbulk without any further packaging. The only relevant question is whether the individual physical items have been packaged together. If so, the individual items are not units, but instead form part of a single package. If not, each physical item is a ‘unit’. Containers will not constitute a ‘package’, in light of the decision of the Court of Appeal in The River Gurara [1998] 1 Lloyd’s Rep. 225. On the facts of The Maersk Tangier, the individual pieces of ‘tuna’ were therefore ‘units’.

El Greco and enumeration of cargo under Article IV.5(c)

Article IV.5(c) of the Hague-Visby Rules provides that “Where a container, pallet or similar article of transport is used to consolidate goods, the number of packages or units enumerated in the bill of lading as packed in such article of transport shall be deemed the number of packages or units for the purpose of this paragraph as far as these packages or units are concerned.” What is required for the number of packages or units to be sufficiently enumerated for the purposes of the rule?

Until now, the only available guidance on this point has been the decision of the Federal Court of Australia in El Greco v. Mediterranean Shipping. In that case, the majority held that the rule required it to be clear from the face of the bill of lading not only how many items were contained within a container, but also whether those items had been packaged together. For that reason, a bill of lading that simply referred to “1 container said to contain 200,945 pieces” was not a sufficient enumeration: it did not enumerate the number of pieces of cargo in the container “as packed”.

Andrew Baker J declined to follow the reasoning of the majority. The Judge held that Article IV.5(c) does not require enumeration of the cargo “as packed”. It merely requires that the number of packages or units inside the container is accurately stated in the bill of lading. In this case, the waybills stated that the containers contained a certain number of pieces of tuna. Each piece of tuna was in fact a ‘unit’. The waybills therefore accurately enumerated the number of units in the containers.

On the Judge’s reasoning, the same result would have been reached in El Greco, but by a different route. In El Greco, the individual posters had been bundled up together into packages. The enumeration of the posters was therefore not an enumeration of the number of ‘packages’ or ‘units’ in the containers.

Calculation of the limit

The judgment also contains useful guidance on how the applicable limits should be calculated. The Judge held that the package / unit limit applies to each individual package. As such, if the limit is £100 per package and there are two packages in the container, of which one suffers £500 of damage and the other suffers £1 of damage, the claim overall will be limited to £101 (not £200).